Death and taxes.

February 18, 2008

Well, okay, just the latter. (Warning, entitled whining ahead.) Today G and I did an online “draft” of our 2007 taxes and guess what? We owe. A LOT. Like, thousands upon thousands of dollars. You might think I am exaggerating, but trust me, dear reader, I am really not. 

What I have realized is that we should have taken the huge amount we owed last year (five grand, to be exact) a little more seriously. Naively, we figured then that it was some fluke, some inadvertent but still minor and easily fixable error on our part. I had mistakenly listed two allowances on my W-4, and both G and I had checked the withholding box for “married” status, instead of “married, but withhold at higher single rate.” So, having corrected these things, we figured, hey, next year won’t be as bad. Maybe we’ll owe a little bit, but we should owe way less than five grand.

…So, this year we owe almost 50% MORE than last year. Turns out–and if we’d consulted an accountant like we’d meant to do but never got around to doing we would have known this sooner–tax law is pretty much set up to penalize couples in which both husband and wife work and both husband and wife make equivalent salaries. That’s why they call it the “marriage penalty,” apparently. What pisses me off about this is how it punishes fiscal equity, and still sort of rewards partnerships in which one spouse, usually the husband, makes dramatically more than the other. (Way to keep kicking it old school, tax law!)

Basically, if one spouse in a marriage is a Wall Street power broker, or physician, or corporate exec making $100K plus, and one spouse is an elementary school teacher, waitress, secretary, or copyeditor making $25 or $30K, then the couple will face no major tax penalty. But if, as is the case with G and I, both spouses make good-but-not-astronomical money, if, in fact, the two spouses make nearly equivalent annual salaries–i.e. the wife is also a professional–then they are really going to get screwed.

Not only do we owe more tax married than we would as two single individuals filing separately, but the system is set up to underwithhold from both of our paychecks! Unless we each voluntarily ask the government to withhold a couple hundred extra dollars per paycheck, all year, we will end up owing big bucks every tax season.

That is, until we save up $50,000 to $60,000 for a down payment and buy some property in our chosen city (yeah right) or, possibly, have a baby (sigh). In spite of the fact that we are going to be drastically in hock to Uncle Sam starting right around April 15, we are still moving ahead with Project: Living, Breathing Tax Deduction. In fact, if we do a Clomid + IUI cycle starting mid-to-late March, I could be getting news of successfully being knocked up at the exact same moment that I am signing over my first born to the government to pay our tax bill! AWESOME.